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Eduardo Vinocur, Halil Kiymaz and Misty L. Loughry
This paper investigates the puzzle of mergers and acquisitions’ (M&A) long-term performance through the strategic management perspective. The authors measure the M&A…
This paper investigates the puzzle of mergers and acquisitions’ (M&A) long-term performance through the strategic management perspective. The authors measure the M&A capability construct and test its relationship with the long-term performance of the firms.
The study employs a natural language processing (NLP) methodology to quantify unstructured data from 564 annual reports and 2,602 M&A synopses from January 01, 2013 to December 31, 2016. The authors combine qualitative document analysis with a quantitative method using a multiple regression analysis model.
Among serial acquirers, M&A capability positively relates to long-term firm performance measured by both return on equity and price-to-book value. The authors also find that the size of the company and the number of acquisitions influence the M&A capability, confirming previous results in the literature.
Detailed M&A management plans are usually confidential and not fully reported. Future studies could employ enhanced artificial intelligence tools to measure the M&A capability construct beyond filing reports, encompassing interviews, social media posts, press releases and other unstructured data sources.
Firms can improve their M&A capability by understanding the underlying foundation of the construct provided in the research. Additionally, researchers can build on the methodology employed using advanced NLP tools to measure M&A capability.
Improving their M&A capability would allow firms to better choose their targets and conduct a superior integration process, which could prevent distressing mergers, unnecessary negative social impacts and culture disruption. As a result, the ensuing organization would be stronger, and the long-term performance would improve.
This study addresses gaps in the literature on M&A performance and provides a new empirical method to measure the M&A capability.
Why are some of the municipalities located on the most dynamic, populous and productive region of a nation, also the poorest of the nation? Why after decades of being at…
Why are some of the municipalities located on the most dynamic, populous and productive region of a nation, also the poorest of the nation? Why after decades of being at the center of national development policies, the municipalities of Greater Buenos Aires are still suffering some of the worst development indicators of the Argentina?